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Credit score down because of fewer debts - Looking for short term tips

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Anonymous
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Re: Credit score down because of fewer debts - Looking for short term tips

Regarding your lates... it sounds as though you are discovering that you do not have any Day 60 lates.  Rather, you have two 30 day lates (and both are from a long time ago).  Those are the only derogs you have (lates, collections, chargeoffs, liens, judgments, bankruptcies, etc.)

 

Is that correct?

 

Two old Day 30 lates hurt you ,much less than one Day 60 late.  But feel free to work on getting the Day 30 lates removed if you can.

Message 11 of 21
Anonymous
Not applicable

Re: Credit score down because of fewer debts - Looking for short term tips


@FN wrote:

So it's impractical to not use the AMEX (charge card) since it is set up on the auto pay for so many things.   Is there a way to get it to report zero or low balance by paying it early?  Or perhaps the credit reporting agencies ping for open balances "as of" and I just need to pay any balances in that window?  It's not clear to me how the balances get reported...seems like a flaw in the system.  Any advice?


Yup!  That's it.  You pay it early.

 

The big idea is that a CC issuer will report the balance that appears at the top of your statement to the three credit bureaus.  If you can pay that down to zero (or a negative number) then Amex will report $0 to the three CRAs.

 

I am guessing that you make your payments electronically, rather than with paper checks.  Electronically is better since it happens much more quickly and the transaction can't get lost in the mail.

 

What you will want to do is to have two different methods of electronic payment.  Inside the Amex site, you will want to add an "external account" (i.e. a checking accout) so that you can make payments inside the Amex site as often as you want.  The advntage is that these payments tend to be registered on your card extremely quickly, often instantly depending on the issuer.  The disadvantage is that Amex may not let you pay the balance down to a negative number (using their in-house tool).

 

But you should also have another method, which will be based inside your checking account itself, using its Billpay feature.  There you will want to add your Amex card so that you can push money from your checking account to the Amex card.  There is typically no restriction on the paying your account down to a negative number here.

 

Armed with these two approaches, you will do the following.  Via multiple payments throuhout the month (2-3 say), you wil keep your balance moderately low.  You will also identify each month the exact date that Amex will print that month's statement.  That date can vary by a few days, so you need to be certain when the next statement is going to be.  A customer service rep will show you how to figure that out.  Then as you get closer to that date, stop using the card and pay the balance down, ideally to a negative number.  Your card will the report $0.

 

You can use the same technique for all three of your cards.  This is how you can use a card a lot and yet make it report $0 or $20 or whatever.

 

As I mentioned earlier, you want one true credit card reporting a small positive balance ($20, $50, whatever) and the other two cards reporting $0.

 

I actually listed four different criteria for that card that reports $20, so make sure you are meeting all four.

 

The mortgage scoring models really like it when most of your cards report a $0 balance.  Right now that is not happening with you.  Two small positive balances and one $0 is not good enough.  You want exactly one card reporting a positive balance and two reporting $0.  (And remember that a negtive balance will be reported as $0.)

Message 12 of 21
Anonymous
Not applicable

Re: Credit score down because of fewer debts - Looking for short term tips

An additional strategy I would recommend in your situation is to see whether some of the recurring transactions that hit your Amex card can have their date of transaction moved.  What you want to avoid is a transaction hitting just before your statement prints.

 

So, let's suppose that your statement typically prints between the 19th and the 23rd, and that your Netflix bill tends to hit around the 18th or 19th.  See if you can move that transaction to earlier in the month -- like the 12th.

Message 13 of 21
FN
Established Member

Re: Credit score down because of fewer debts - Looking for short term tips

So in my case, the billing period appears to be the last business day of the month (Jan 31 is the next one).  There is a grace period of about 20 (calendar) days.  So currently I have a bill from December for call it $6K which will pay on Jan 20 and that will leave something like $5K of "current charges" which I'll get a bill for on Jan 31.  I think what you're saying is that on Jan 30, I should pay whatever is "current".  I'll give that a go for a few months and see what happens.  Seems like a deficiency in FICO's methodology but who knew!

Message 14 of 21
Anonymous
Not applicable

Re: Credit score down because of fewer debts - Looking for short term tips

If your statement always ends on the last business day of the month, then yes you need to pay it down to $0 or less than $0 the day before that.

 

But you also need to make sure that no stray charges sneak in right around that time.  I added a small post about that 10 minutes ago.

 

You need to use this same technique to make sure that two of your cards are reporting $0 and the other is reporting a small positive balance.  The four criteria for that card with the positive balance I listed earlier.

 

The defects in FICO's method of assessing credit card risk are tied to the way that the credit bureaus had very limited datasets for many years.  That changed a few years ago with the addition of what are called "trended data" but it will take FICO a while to produce models that use these data.  (I.e. models that can see that, over the last 24 months, a guy like you always pays his cards in full -- the existing models can't see that.)  And more importantly, it will take a while for creditors and lenders to adopt them.

 

It ain't gonna happen in the next three months.  So use the approach I have indicated thus far: all cards at $0 except one.

Message 15 of 21
FN
Established Member

Re: Credit score down because of fewer debts - Looking for short term tips

For those who might be interested, apparently that didn't work.  I paid off the AMEX so that it had a negative balance at the end of the billing cycle and it was reported to at least one bureau as zero.  There are also several other cards at zero and one with a few hundred bucks on it.  So it shows as zero percent utilization.  Score hasn't moved.

Message 16 of 21
Anonymous
Not applicable

Re: Credit score down because of fewer debts - Looking for short term tips


@FN wrote:

For those who might be interested, apparently that didn't work.  I paid off the AMEX so that it had a negative balance at the end of the billing cycle and it was reported to at least one bureau as zero.  There are also several other cards at zero and one with a few hundred bucks on it.  So it shows as zero percent utilization.  Score hasn't moved.


Can you help us understand better what you mean?  You say "that didn't work."  What didn't work exactly?

 

PS.  If you have most of your cards reporting at $0 but at least one reporting at > $200, then you are most certainly not at 0% utilization.  You are at 1% utilization at least -- since FICO rounds all percents up.  (Thus 0.1% is rounded by FICO up to 1%, 9.2% is rounded up to 10%, etc.)

PPS.  Remind us what tools you are using to check your credit reports and also your credit scores?

Message 17 of 21
FN
Established Member

Re: Credit score down because of fewer debts - Looking for short term tips

Thx for the response!  I use the myFICO 3B report plus alert thing.  It gives the FICO 4 scores for the 3 bureaus.  I got an alert after the AMEX cycle saying the balance was zero but my credit score didn't move.  I have one VISA card with a few hundred on it so if they round up then yes it would be 1% I guess.  I wonder if the issue is that I already get "dinged" as having "too few credit accounts" so having low utilization isn't helping.  At this stage it is what it is I think since I'm going to get a mortgage next month but if you have any ideas I'm all ears!

Message 18 of 21
Anonymous
Not applicable

Re: Credit score down because of fewer debts - Looking for short term tips


@FN wrote:

Thx for the response!  I use the myFICO 3B report plus alert thing.  It gives the FICO 4 scores for the 3 bureaus.  I got an alert after the AMEX cycle saying the balance was zero but my credit score didn't move.  I have one VISA card with a few hundred on it so if they round up then yes it would be 1% I guess.  I wonder if the issue is that I already get "dinged" as having "too few credit accounts" so having low utilization isn't helping.  At this stage it is what it is I think since I'm going to get a mortgage next month but if you have any ideas I'm all ears!


The alerts provided by your myFICO 3B monitoring package are FICO 8 alerts.  FICO 8 is not the scoring model that mortgage lenders use.

 

Your myFICO package gives you your mortgage scores every time it gives you your full 3B report.  If you purchased the $30/month package, that's once every 90 days.  If you purchased the $40month package, that's once every 30 days.

 

I encourage you to subscribe to Credit Karma very soon.  That will give you the ability to pull your EQ and TU reports as often as once every 7 days with completely fresh data.  Ignore Karma's scores (which are not FICO scores), ignore what Karma says about your utilization, etc. -- only use it to pull your reports.  You'll be wanting to see what your derogs are and your CC balances.

 

The advice your received earlier in the thread about wanting all your cards to report $0 except for exactly one is based on what will benefit the FICO mortgage models.  Those models are especially sensitive to seeing most CC balances at $0.

 

Because you arrived here on the forum very late in the game, all we could do is scramble to tell you the thing most likely to give you some benefit to your mortgage scores in a very constricted time frame.  We cannot be sure it will help your mortgage scores, but it was the right step to take.  What is certain is that the FICO 8 alert you received tells you nothing.

 

You should probably wait until all your CC balances are reporting as recomended to EQ and TU, then wait one more week for EX, and then pay $60 to have your mortgage scores all pulled again -- assuming you really want to see them.

Message 19 of 21
Anonymous
Not applicable

Re: Credit score down because of fewer debts - Looking for short term tips

Hey all. I've been a member for awhile but have never posted. I just love reading these forums. Plus, the forum has helped me a lot.

 

I have a couple newbie basic questions. 1) I don't understand the difference between the weekly score changes and alerts we get routinely via "My Fico".  What is the difference between those and a once a month credit card statement update two days later?

 

I ask because I'm trying to qualify for a mortage and need those scores to go up. My mortgage broker is planning to fax in a "Current Balance Letter" from each credit card company to credit bureaus early next week.  He says it takes 5-7 days for them to review and update the scores. Personally, I've never heard of such a thing. But this is my first go at purchasing real estate.  At 62 it is a big deal. Smiley Happy

 

I've found a condo, which I didn't plan on doing this soon. I'm just hoping it isn't sold before I get these scores where they need to be.

Message 20 of 21
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